Budget Roadblocks Stymie Federal IT Managers

Government information technology managers will no doubt spend every nickel of the Obama administration’s 2014 proposed IT budget of US$81 billion. They will also likely be dissatisfied with the business environment that affects IT acquisition and deployment.

For starters, the proposed 2014 budget for IT, which actually shows a small gain versus anticipated 2013 spending, is not a sure thing. Congress could trim the proposal as part of the budget process — or simply continue with government-wide cuts associated with the cost-cutting sequestration program.

Budget issues, as well as IT acquisition impediments, showed up as major concerns within the community of federal chief information officers in a recent survey sponsored by Grant Thornton and TechAmerica.

Forty-one federal CIOs, information resource management officials, and congressional oversight committee staff participated in the survey. Results were published earlier this month.

Shaky Funding Landscape

“While the federal budget called for an increase in IT spending, the sequester and the habit of continuing resolutions leaves the ground shaky for many federal CIOs. It is critical for the industry that supports the federal IT enterprise to know what the CIOs are prioritizing,” said Trey Hodgkins, senior vice president of the global public sector at TechAmerica.

However, the challenges reflected in the annual survey aren’t limited to CIOs — they also affect the vendor community’s efforts to provide IT solutions for federal agencies.

On the budget front, CIOs criticized the “mindless nature of the sequester,” which treated high value critical infrastructure projects and lower priority IT projects equally.

“CIOs believe they can deal with a future where funding is lower, but they need flexibility to adjust to changes and priorities,” the report says.

Still, there was a bit of a silver lining to the cloudy budget horizon. Permanently smaller budgets “motivate creative behaviors” among CIOs and other government managers who depend on IT, the survey respondents indicated.

Constrained budgets often lead CIOs to enhance efficiency and spark innovation, the report notes, citing several examples:

  • taking an enterprise view of contracts and infrastructure to reduce redundancy;
  • moving from long-term implementation to more agile, focused “buying by the drink through shared services”; and
  • at one agency, providing electronic tablets to field staff instead of laptops — which saved $2,500 per employee — and standardizing desktop and laptop configurations, which reduced service costs by 60 percent.

“CIOs have resigned themselves to flat or declining budgets and have worked diligently to find smarter, more efficient ways to operate amidst a growing tide of federal retirements and a multitude of recruitment challenges,” said George DelPrete, a principal with Grant Thornton and chair of the CIO survey.

Agencies, Vendors Share Challenges

The IT acquisition process “remains a major management challenge and one that is foremost on the minds of federal CIOs,” the report says. In the past few years, federal agencies such as the General Services Administration and others have been modifying traditional acquisition contract vehicles to deal with rapidly changing IT situations. One example is advancing the use of lowest-price technically acceptable, or LPTA, procurements.

Many IT procurements are by their nature long, complex and expensive, and they often require highly technical and proven skills to ensure successful implementation. However, a reliance on LPTA may not give agencies an adequate opportunity to factor value into the procurements, some respondents suggested, and the LPTA vehicle could become a default strategy that does not fit all acquisitions.

The increased use of strategic sourcing for IT commodities — an initiative of the Office of Federal Procurement Policy in which multiple entities pool their buying power so the buyers get greater value for their contracting dollar — will have a slight edge, survey respondents predicted.

Furthermore, 60 percent of federal CIOs expected to see continued growth in the use of multi-award, blanket purchase agreements for buying IT services.

All of these initiatives seek to centralize buying in a select few places, so the government can leverage its size and scope to get better value and price from its vendors.

The fact that significant procurement challenges remain in spite of innovative contract vehicles can be atributed to the nature of acquisitions and evolving IT requirements.

“I think these vehicles have been helpful in many ways, but IT systems are inherently complex,” David McClure, associate administrator of the GSA’s Office of Citizen Services and Innovative Technologies, told the E-Commerce Times.

“Another factor is that agencies are changing rapidly from government ownership of IT systems to greater use of IT as a Service on an as-needed basis from a provider. They are so familiar with the ownership mode that they haven’t gotten a full grasp of how to negotiate in a service mode,” he said.

Legislation designed to improve federal IT acquisition processes has been introduced by Rep. Darrel Issa, R-Calif., the report notes. Not all CIOs were convinced of the need for the legislation.

However, “a lot of what is covered in the survey report aligns with what is in the proposed legislation, such as providing enhanced authority for federal CIOs, access for CIOs to senior levels in their agencies, and a more meaningful CIO role in IT investment decisions,” Hodgkins told the E-Commerce Times.

“We look on these proposals as re-asserting or restoring elements of the existing Klinger-Cohen Act governing federal IT management,” he said.

Dialog With IT Vendors

TechAmerica supports provisions of the legislation designed to encourage agency-wide procurement of IT and government-wide strategic sourcing approaches to IT investments, versus individual agency procurement or even IT acquisition by smaller units such as bureaus or divisions within agencies, Hodgkins said.

TechAmerica also supports provisions in the legislation that mitigate the stovepipe element of the appropriation process that involves Congress budgeting on a narrow program-by-program basis.

“The bill sets up a multiyear revolving fund to give the agencies more flexibility in acquisition,” Hodgkins added.

The Obama administration has been encouraging federal agencies to improve communication with private sector IT companies to bolster agency knowledge of IT solutions and acquisitions.

While not directly addressed in the survey, the issue was raised during a TechAmerica panel discussion on the report. NASA, for one, has benefited from such contacts, said panelist Sasi Pillay, Ph.D., chief technology officer for IT at the agency.

“We have discussed our situation with companies like Amazon, Verizon and AT&T on how to move operations to the next level. Agencies can describe their needs to the vendor community, which can help the vendors shape the necessary products,” Pillay told the E-Commerce Times.

“For example, when I led the creation last year of an IT mobility strategy, we invited about 20 vendors — I like to call them partners — to discuss the what is available in the marketplace and how we would use it, and we do that in an open and transparent environment,” he said.

“Ultimately,” said Pillay, “these dialogs help us to develop better acquisition requests for proposals.”

John K. Higgins is a career business writer, with broad experience for a major publisher in a wide range of topics including energy, finance, environment and government policy. In his current freelance role, he reports mainly on government information technology issues for ECT News Network.

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